The purpose of SBA Form 159 is to record any fees getting paid for SBA financing in order to keep lenders from paying related parties additional fees – and then charging you. This keeps the total costs of the loan lower, making affordable loans more of a possibility for small businesses. It is a safety net designed to help prevent lenders from paying fees to other parties at your expense. This form is a binding document that spells out what fees are being charged to whom and to whom those monies are being paid.

Source: www.sba7a.loans/sba-7a-loans-small-business-blog/what-is-the-sba-form-159

Source: sba504.loans/sba-504-blog/what-is-sba-form-159

You’ll need to gather the following information and have it on hand for each agent or entity who’s received compensation before you sit down to complete Form 159:

• The total amount you were charged by each agent
• The business and representative’s name for each agent, along with complete contact information (phone number and business address)
• The loan applicant’s authorized representative’s name (if applicable)
• An itemized list (schedule) of services performed, number of hours, and hourly rate billed for each service. for any agents paid more than $2500
• An itemized and justified compensation list if a disaster loan exceeds $500 (or $2,500 for businesses)

SBA Form 159 is necessary for reporting the fees being paid during an SBA loan transaction. It is a binding document that spells out what fees are being charged to whom and to whom those monies are being paid. This form is a safety net designed to help prevent lenders from paying fees to other parties at your expense. In September 2018, the two versions of this form – one for those taking out a 7(a) loan and another for 504 loan borrowers – were combined into a single document by the Office of Financial Assistance (OFA).

If you paid your bank any loan packaging fees for closing your loan, or if they’re involved with referral fees, you’ll need SBA Form 159. If you or your lender hired a loan packager, referral agent, broker, accountant, attorney, or independent consultant, you’ll need SBA Form 159. You’ll also need one of these forms for each and every paid party involved in the financing process.

You won’t need a Form 159 for your regular accountant, collateral or business appraisers, commissioned real estate agents nor closing attorneys. Only those individuals directly involved with your loan financing process warrant the extra paperwork.

In order to take out an SBA 504 loan, your business must be eligible for the program. The eligibility requirements are pretty simple, though. In order to qualify, businesses must be for-profit enterprises, must not be above a certain size, and cannot be in engaged or involved in certain industries, such as lending money, gambling, speculation, or illegal activities. To help clarify things, we’ve created a quick and easy list to help you determine if your business qualifies for the program:

• Your business must be a for-profit organization.
• Your business must meet current SBA size standards.
• Your business’ net worth cannot exceed $15 million.
• Your business cannot earn 1/3 or more of its income from packaging SBA loans.
• Your business must earn an average of $5 million or less per year (after taxes, and only for the preceding two years)
• Your business cannot be engaged in any sort of passive or speculative activities

Note that additional requirements may be placed by CDCs or conventional lenders. You can find a full list of eligibility requirements and other important information with the SBA here.

The SBA 504 loan program offers several benefits to businesses, including long-term, fixed-rate financing used to acquire fixed assets for expansion or modernization, lower interest rates and lower down payment requirements than 7(a) loans and express loans, and terms for SBA 504 financing typically of 10, 15, or 20 years. In the case of default, the private lender has first lien on project assets.

For more information, please visit the following sources:

• SBA 504
• Private Lender
• Certified Development Company
• SBA 504 Loan
• Interest Rates
• Down Payment
• SBA 504 Loans vs 7(a) Loans
• Private Lender First Lien